A packed house of business, economics and philosophy enthusiasts filled DeBaun Auditorium at Stevens last week for a fascinating talk by Nassim Nicholas Taleb, a bestselling author and distinguished professor of Risk Engineering at Polytechnic Institute of New York University. The event, “Antifragility: Coping With Unpredictability in Finance, Engineering and Other Fields,” was co-sponsored by the College of Arts and Letters (CAL) and the School of Systems and Enterprises (SSE) at Stevens through CAL’s Center for Technology Policy and Ethics and Center for Science Writings and SSE’s Financial Engineering Seminar Series.
Taleb, a provocative thinker and self-described "businessman-trader" and "man of letters," has devoted himself to studying "luck, uncertainty, probability and knowledge" not just in economics, but in all realms of life. He is especially concerned with unusual events, or "black swans," which have low predictability but high consequence and are very difficult to foresee based on historical information. He argues that in general, society puts too much confidence in its ability to predict events from past knowledge, which leads to all sorts of problems.
In his runaway bestseller on the unpredictability of the stock market, “The Black Swan: The Impact of the Highly Improbable” (Random House, 2007), Taleb argues that black swans have a much bigger impact on our lives than experts generally acknowledge. The book received rave reviews, with The Sunday Times ranking it among the most influential books since World War II, Harvard historian Niall Ferguson called the book "idiosyncratically brilliant," New York Times columnist David Brooks crediting Taleb with having foreseen our current global recession, and Bloomberg Markets voting Taleb to its list of the 50 Most Influential Persons in the World.
Taleb’s discussion at Stevens was focused on his forthcoming book, “Antifragility” (Random House, 2012), a follow-up to “The Black Swan” which explores how we can reduce the threat of black swans and reap their potential benefits in the realms of engineering, medicine, business and politics. Taleb took the stage after an introduction by John Horgan, director of the Center for Science Writings, who called Taleb not a Wall Streeter, but a philosopher and freethinker.
Taleb said “Antifragility” is a less technical, “tightening of the screws” of “The Black Swan” which is focused on how systems can not only respond, but thrive in response to randomness, stress and disorder – not hiding from it, but using it to their advantage. He called systems that can do this “anti-fragile,” and during his lecture, he demonstrated the difference between “fragile” and “anti-fragile” events – i.e. debt compared to venture capital equity or a nation state compared to a city state. Fragile events, he said, are rare but extremely harmful. For example, a single 6.0 earthquake does much greater damage than the 8,000 micro earthquakes that happen daily across the world. In contrast, anti-fragile events – which are much harder to identify – bring much less harm as their intensity increases. Human bones, for example, must be placed under a certain degree of stress or they will weaken.
At the end of Taleb’s lecture, Horgan briefly interviewed Taleb and then opened a question and answer session with the audience, which delved into a wide array of topics including risk management, unusual phenomena, solutions to modern problems and other philosophical ideas.
Stay tuned in to Taleb’s latest ideas and works at his web site, http://www.fooledbyrandomness.com/.